Business Owner Pleads Guilty to Money Laundering Related to K2 Distribution

JEFFERSON CITY, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced that the owner of Puff N Snuff, LLC, with two locations in Camdenton and Eldon, Mo., pleaded guilty in federal court today to his role in a money-laundering conspiracy related to the distribution of synthetic marijuana, commonly referred to as K2.

Charles Sterling Austin, Jr., 63, of St. Charles, Mo., pleaded guilty before U.S. Magistrate Judge Matt J. Whitworth to participating in a money-laundering conspiracy. As the owner of Puff N Snuff, Austin also pleaded guilty to the same charge on behalf of the company.

By pleading guilty today, Austin admitted that he purchased synthetic marijuana from several sources and sold it in his smoke shop. Austin knew that his customers were using these synthetic cannabinoids as a drug. The packages of synthetic cannabinoids bore trade names such as, “Mayan,” “Island Breeze,” “4bidden,” “Remix,” “Cheap Trip,” “Dr. Feel Good,” “White Rabbit,” “XXXtreme Bliss Blueberry Sky,” “Deathgrip,” and others. These packages also bore false representations that the contents were “incense” and “not for human consumption” when, in fact, these products contained synthetic cannabinoids that were intended for human consumption as a drug. The false labeling was intended to defeat the regulation of these drugs by the Food and Drug Administration and assure customers that they were not purchasing an illegal high. Undercover law enforcement agents purchased synthetic cannabinoids from Puff N Snuff on multiple occasions during 2012 and 2013.

According to today’s plea agreement, Austin made at least 28 bulk purchases of synthetic cannabinoids from at least two sources totaling $707,412 between Aug. 3, 2012, through Feb. 19, 2013.

During the four-month period from Aug. 27 through Dec. 30, 2012, Austin deposited $1,687,180 into Puff N Snuff’s bank account from the proceeds of the sale of synthetic cannabinoids, comingled with the proceeds from the sale of other products.

On Sept. 10, 2013, law enforcement officers seized $423,327 from the business bank account. Under the terms of today’s plea agreement, Austin must forfeit those funds to the government.

According to today’s plea agreement, Austin wrote seven checks from Puff N Snuff’s bank account totaling $134,750 as payment for construction of the Puff N Snuff building located at 1900 U.S. 54 Business in Eldon, Mo. Austin admitted that the purchase of the land and the construction cost of the Puff N Snuff building was paid for with proceeds from the sales of synthetic cannabinoids. Under the terms of today’s plea agreement, Austin must forfeit the property to the government. Austin must also forfeit to the government a money judgment of $707,412.

Under federal statutes, Austin is subject to a sentence of up to 20 years in federal prison without parole, plus a fine up to $500,000. Puff N Snuff is subject to a sentence of up to five years of probation and a fine up to $500,000. A sentencing hearing will be scheduled after the completion of a presentence investigation by the United States Probation Office.

This case is being prosecuted by Supervisory Assistant U.S. Attorney Michael S. Oliver. It was investigated by the Drug Enforcement Administration, IRS-Criminal Investigation, Homeland Security Investigations, the Columbia, Mo., Police Department, the MUSTANG Task Force, the LANEG Drug Task Force, the Cole County, Mo., Sheriff’s Department, the Morgan County, Mo., Sheriff’s Department, the Camden County, Mo., Sheriff’s Department, the Camdenton, Mo., Police Department, the Missouri State Highway Patrol, the Kirksville, Mo., Police Department, the North Missouri Drug Task Force, the Schuyler County, Mo., Sheriff’s Department, the Edina, Mo., Police Department, the Linn County, Mo., Sheriff’s Department and the  Brookfield, Mo., Police Department.